Yet they've survived the crypto crash, and their coin is still pegged to the dollar. I'm curious what people make of this? Have opinions changed?
I think you're combining two different questions with the word "scam".
(A) Is Tether stable and able to keep its peg?
(B) Is Tether lying about its reserves (composition, quantity, or both)?
The answer to (A) is "not all the time" and perhaps that will turn into "not most of the time" (as we have seen with other stablecoins recently). Tether has actually lost its peg in the past by a substantial margin[1] before recovering.
The answer to (B) is still almost certainly "yes". They have resisted legitimate audits and have even said that full transparency would destroy their company[2]. We know they don't hold $1 for every 1 USDT, and some of their other reserve assets are more dubious than others.
The company has survived a "slow-motion bank run" recently[3], but it's unclear how much bigger or faster of a bank run it could withstand. Experts and investors are still betting that Tether will collapse in the near future[4].
1. https://www.coindesk.com/markets/2022/05/12/tether-loses-1-p...
2. https://coingeek.com/tether-claims-revealing-assets-could-de...
3. https://www.theguardian.com/technology/2022/may/22/tether-pa...
4. https://www.politico.eu/article/crypto-currency-tether-finan...
Tether, centralized exchanges... They are all just poorly reinvented banks really. Cryptocurrencies went wrong the second they showed up. They were supposed to replace the USD, not turn into USD backed tokens.
I’m not quite sure they pose that much risk to the wider financial markets.
That doesn't mean I think of Tether as an asset to put much trust in, since I still expect there to be quite some shenanigans at work in the background, but it seems they've at least built their empire on more solid ground than many people expected.
If there is another wobble, and significant redemptions, any hint that they aren’t going to be fulfilled will cause a run. At which point the whole house of cards will fall, if as seems likely they don’t have the $67.5B in the bank.
Like if I peg my stuffed animal to a dollar and then made a bunch of blog posts about the stability of my stuffed animal value, is it really noteworthy?
I'm a crypto noob, so my comment is pure curiosity - apologies if its naive of info I'm just unaware of.
Sellers are free to decide what prices they will not sell below, but they do not determine price. It takes buyers and sellers to do that.
I'd have a better argument that my home was worth $1 billion if inside the guest bedroom there was USD 1 billion. That'd be a pretty good way to convince buyers that my home's price was pegged to the value of one giga dollar. If it was $900 million in cash and $100 million in IOUs, that'd still convince some people too, so on and so forth.
I gather the issues with Tether are a) we don't know just what they have because of a lack of transparency, b) from what we DO know, in chasing yield, they've picked up some higher risk assets that they say are baaaaasically the same as cash (Commercial paper from Chinese real estate developers iirc?) that could be susceptible to losing value in a financial contagion scenario, and therefore be worth less than the dollar put in when Joe Q Crypto wants to take his dollar back out.
I used to work in the cryptocurrency industry and my impression was that the concensus of the people actually working on crypto or handling large amounts of money was that there is no particular reason to believe that tether is insolvent. Tether's honesty and integrity aren't held in very high esteem and it might well have been the case at one point that they were printing unbacked tethers, but that doesn't mean tether is not properly backed now - if they used that tether to buy lots of bitcoin, and bitcoin went up, then they would have made out like a bandit.
Personally I wouldn't be surprised either way, but I lean towards thinking that tether is not in any immediate danger of collapsing.
failing your way to success. that's the dream to aspire to.
A lot of people who like to say all crypto is a scam liked to say tether was a scam. After Luna, people who didn't understand the difference between an algorithmic stable coin and a fiat backed one said tether would be next.
Maybe it is a scam. But there is no evidence of that today and there was no evidence 6m ago...
The problem the cryptocurrency community had with them was really more about their use of the tools of the enemy (treasury notes! horror!) rather than cold hard cash.
Confidence in Tether would skyrocket if they were audited and found to be solvent and had 100% treasury notes. Ihis "tools of the enemy" hyperbole is childish - they literally have "USD" in the ticker symbol.
Essentially what they did was create an unregulated private bank and issue a counterfeit digital USD.
Nobody knows exactly when it’ll fall apart but it’s almost inconceivable that it won’t.